1. Field of Invention
This invention relates to a method and apparatus for authorizing credit card or bank card transactions. In particular, this invention concerns preauthorizing a credit card for a particular transaction and subsequently initiating the authorized transaction at a vendor location using the credit card via a credit card authorization device.
2. Description of Related Art
Credit card validation devices and methods are known in which a credit card vendor communicates with a credit card company to determine whether a credit card has been reported as missing or stolen and/or whether there is sufficient credit to make a particular purchase. Conventionally, a user is only subjected to a verification process to determine whether the user is authorized to use a credit card when the user is making a purchase at a vendor's location. According to the conventional process, a vendor should, but does not always, compare the customer signature to the signature on the back of the credit card to determine whether the customer is the authorized user of the credit card. If the signatures do not match, the vendor must refuse the credit card transaction and, presumably, call the police and the credit card company to inform them that the credit card may be stolen.
This visual authorization check creates numerous problems for both the customer and vendor. First, the vendor is required to make a personal judgment as to whether signatures "match." Because this decision is subjective, and because vendors are under the pressure of reaching sales goals and retaining good will in the community, their judgment as to whether signatures match can be biased to avoid embarrassment and retain business. In fact, many vendors, due to either time constraints or a desire to make sales goals, do not even look at a customer's signature to determine whether the customer is an authorized user of the credit card.
Furthermore, in many instances, the customer is not located within view of the vendor, as in the case of mail order purchases, telephone purchases and internet purchases. The conventional method for using a credit card in a mail order purchase, telephone order purchase or other remotely ordered purchase does not include a verification process to verify that the user of the credit card is authorized to make the purchase. Currently, vendors have no apparatus or method to verify that a user is an authorized user of a credit card when the purchase is being initiated at a location remote from the vendor, e.g., by mail, telephone, facsimile, or computer. As a result of the above-mentioned problems, credit card companies have incurred great costs in providing purchase credit to unauthorized users of credit cards.
U.S. Pat. No. 5,485,510 to Colbert discloses a secure credit/debit card authorization device. The device is used to allow a credit card user to conduct a transaction over phone lines without transmitting the credit card number to the vendor. Accordingly, the device provides a secure system for transacting credit card purchases. In use, a credit card holder calls the credit card company which authorizes the credit card holder to make a particular purchase by providing an authorization code to the credit card holder. The credit card holder then makes a purchase by supplying the authorization code (not the credit card number) to a vendor. The vendor charges the credit card company by using the authorization code to charge against the credit card. Accordingly, the credit card number is never shown to the vendor and is only known to the credit card holder and the credit card company, ensuring its security.
The credit/debit card authorization device is not concerned with preauthorizing use of a credit card so that only specific transactions can be made using the credit card. In addition, the credit/debit card authorization device does not provide the benefit of allowing a vendor or credit card company to permit a transaction only when a user is authorized, regardless of whether the user is located at the vendor location or is communicating via phone, facsimile, Internet or other communication device.
Thus, the industry lacks a device and objective method that can be used during a sale, either at a vendor location or at a location remote from the vendor, which quickly, inexpensively, reliably and without embarrassment authorizes a user to use a particular credit card and to make a particular credit card transaction.